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Starting a Financial Advisory Firm

Does anyone know how the SBA and its lenders view the formation of small
Financial Advisory firms? In transitioning from an employer to a new small
company that I plan to form (for those in the know, it will be a "Registered
Investment Adviser" company), I may need a loan for interim financing, to pay
some overhead and also help pay salary, including my own. Is this possible?
Thanks for any perspective!

HorizonBusinessFunding | Window Shopper |
3/31/2014 - 2:31 pm

This kind of business can be tough since underwriters will often view
financial businesses as more high risk. In this thread I see you will have a
book to get started. If you can run your business for as short a time as
three months while turning a profit, more options open up to you. $50K is
microloan territory, so I would investigate those while making plans to
potentially liquidate assets in order to get to a point where more options
become available to the business.

JGabriel | Community Moderator |
7/16/2013 - 10:17 am

Try getting in touch with a local Small Business Development Center or SCORE, two of SBA&#39;s resource partners. They&#39;re located across the country and provide free business counseling and answers. Visit our local assistance guide to find your local SBA resource partners by entering your zip code. Good luck!!

Susanwest6 | Window Shopper |
7/2/2013 - 7:51 pm

CSDIII | Window Shopper |
7/1/2013 - 11:04 am

Hello GHT5282,

If you would like to have a more concentrated conversation, feel free to
check us out on the web or via our Linkedin business profile page. We work
with financial professionals; RIAs, Insurance Agents, etc.. so I'm very
familiar with your situation. Feel free to contact me anytime and good luck.

CSDIII | Window Shopper |
6/29/2013 - 10:41 pm

You may find it difficult to procure financing for this business type,

I would recommend purchasing an existing practice or book of business as a
more sound start up strategy. The process of practice acquisition is very
complex, however the clear benefit of having historical revenues from which a
lender can base core lending metrics such as debt service coverage ratio and
loan to value will prove priceless in conversations with a lender.

I hope this information proves useful to you and wish you well in your
endeavor.

ght5282 | Window Shopper |
6/30/2013 - 6:09 pm

Show Replied Text…

You may find it difficult to procure financing for this business type,
I would recommend purchasing an existing practice or book of business as a more sound start up strategy. The process of practice acquisition is very complex, however the clear benefit of having historical revenues from which a lender can base core lending metrics such as debt service coverage ratio and loan to value will prove priceless in conversations with a lender.
I hope this information proves useful to you and wish you well in your endeavor.

Thank you. So keep in mind that this entity would be hiring an advisor with
an existing book producing $10,000/month in revenue, and a growth rate
$3,000-$5,000/month in revenue added per year. So it would be "acquiring"
this growing book. The advisor doesn't technically own the book, but it would
be following him as he moves from his prior employer. Could a loan be
obtained then only after the advisor were hired? Could a loan be obtained for
purposes of hiring this advisor? Not at all? Obviously we are not talking
about a very large amount being possible. Potentially one of the $50K maximum
micro-loans?
Thanks so much!
PS: Although I would like very much to buy an existing advisory business, I
am being told so far by people in this "ecosystem" that they are almost never
up for sale, so I may not be in a position to wait around for such a
situation to present itself. Advisors, apparently, are able to work well past
65, and many of them it seems are choosing to do so. If you have ideas for
finding advisory practices to buy, I am all ears!

CSDIII | Window Shopper |
3/30/2014 - 10:10 am

Show Replied Text…

Thank you. So keep in mind that this entity would be hiring an advisor with an existing book producing $10,000/month in revenue, and a growth rate $3,000-$5,000/month in revenue added per year. So it would be "acquiring" this growing book. The advisor doesn't technically own the book, but it would be following him as he moves from his prior employer. Could a loan be obtained then only after the advisor were hired? Could a loan be obtained for purposes of hiring this advisor? Not at all? Obviously we are not talking about a very large amount being possible. Potentially one of the $50K maximum micro-loans?
Thanks so much!
PS: Although I would like very much to buy an existing advisory business, I am being told so far by people in this "ecosystem" that they are almost never up for sale, so I may not be in a position to wait around for such a situation to present itself. Advisors, apparently, are able to work well past 65, and many of them it seems are choosing to do so. If you have ideas for finding advisory practices to buy, I am all ears!

I see that you are located in New York,

We have a presence there in the financial district downtown Manhattan and I
would be happy to share with you what opportunities for acquisition exist in
the exact New York market and region more broadly. My contact information can
be found on my SBA community profile.

CyrusI | Window Shopper |
7/17/2013 - 6:02 pm

Show Replied Text…

Thank you. So keep in mind that this entity would be hiring an advisor with an existing book producing $10,000/month in revenue, and a growth rate $3,000-$5,000/month in revenue added per year. So it would be "acquiring" this growing book. The advisor doesn't technically own the book, but it would be following him as he moves from his prior employer. Could a loan be obtained then only after the advisor were hired? Could a loan be obtained for purposes of hiring this advisor? Not at all? Obviously we are not talking about a very large amount being possible. Potentially one of the $50K maximum micro-loans?
Thanks so much!
PS: Although I would like very much to buy an existing advisory business, I am being told so far by people in this "ecosystem" that they are almost never up for sale, so I may not be in a position to wait around for such a situation to present itself. Advisors, apparently, are able to work well past 65, and many of them it seems are choosing to do so. If you have ideas for finding advisory practices to buy, I am all ears!

GHT5282,

It's possible to acquire a microloan, absolutely. The hard part is
consulting/advisory businesses are difficult to finance no matter how the
books look. At the end of the day, it'll come down to your personal assets
and credit.

If you only need 50k, you could potentially access existing retirement assets
without penalty or tax to fund the acquisition. It's not a loan nor is
interest accrued and, if you believe the business will succeed, you'll win
twice because your retirement funds will actually be invested into your own
venture.

There are multiple other options if you're only needing 50k such as a 3 year
term loan (non-SBA).